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Master Vendor Model vs. Vendor Neutrality: Pros and Cons

Healthcare companies have been finding creative ways to minimize skill gaps through qualified talent for decades now. Staffing shortages were exacerbated throughout the pandemic, with some recovery happening in recent years. Most organizations became dependent on contingent labor in some form or another, for good reason — since 2020, nearly one in five healthcare workers left their jobs and recent surveys suggest that 47% of U.S. healthcare workers plan on leaving their positions by 2025.

Throughout your search for qualified, contingent labor, you may have come across the phrases "master vendor model" or "vendor neutrality". While each are viable methods of placing talent, they stand in stark contrast to one another in terms of their methods.

Here, we will go over both the master vendor model and vendor neutrality, analyze pros and cons of each, and help you find out which is right for your business.


What is the Master Vendor Model?

The master vendor model of healthcare staffing is when a "master" vendor, or a singular vendor, handles all or most contingent staffing needs. Master vendors are adept at understanding an organization's needs and are able to place staff quickly and efficiently. However, since the organization is dependent on a single entity, this comes at a premium price — and they only have access to one labor pool.


Master Vendor: Pros and Cons




Centralization: Since there's only one point of contact for all staffing needs, communication and processes are simplified and expedited.

Limited access to talent: With only one vendor at your disposal, access to a broad spectrum of talent is limited. There may come a time when you need specialization but have to pay over market rate for it.

Efficient administrative duties: Facility administrators are able to focus on more pertinent tasks while the master vendor handles recruitment and placement.

Reliance on one vendor: If that vendor experiences business disruptions or is limited in their offerings, you may encounter issues. 

Consistency: One vendor means you will experience consistency in your contingent labor force, for better or worse.

Profit motive: A singular vendor, while interested in helping your organization, also has a motive to make profit. This means they are more likely to prioritize their own staffing agency and charge premium prices.


Going through the motions: In a non-competitive landscape, the master vendor is not incentivized to innovate.


Master Vendor Model: The takeaways

A master vendor model may very well work for your organization, depending on your needs. It is important to understand the relationship you're getting into. If the master vendor owns its own staffing agency, there's a good chance they'll prioritize placing their own talent, even if they aren't the best fit and they come at a higher price point. 


As a recent Forbes article states, "...most healthcare systems work with managed service providers, or MSPs, to oversee their contingent workforce programs. Many of these MSPs are owned or affiliated with a staffing agency – and prioritize keeping their own workers on billable engagements and maximizing margins."


What is Vendor Neutrality?

Vendor neutrality is a method of managing your contingent employees in which a third party handles staffing responsibilities, but utilizes multiple vendors rather than their own. This partnership often comes in the form of a Managed Service Programs (MSP) — a management service that specializes in outsourcing certain operations to cut costs and improve performance.


Vendor Neutrality: Pros and Cons




Cost efficiency: Vendor-neutral partners have no interest in promoting certain agencies over others. Their only concern is ensuring your organization gets the right workers for affordable prices.

Vendor relationships: Since the MSP works to manage a number of vendors on behalf of the facility, the facility itself may not have as many opportunities to formulate strong relationships with a particular vendor.

Better quality: Since they have access to a wider labor pool, vendor-neutral organizations can always find top talent. Selection is based on qualifications and how well they fit the role, not the agency they come from.

Dependence: Organizations depend on MSPs to maintain relationships with a number of vendors. However, if the MSP performs adequately, this should not be an issue.


Centralization: Acting as a single point of contact that handles all vendors, communication is streamlined.


Easy vendor management: Spend less time managing relationships between a number of staffing agencies.


Streamline administration: Vendor-neutral MSPs handle all aspects of contract management, employee management, interviewing and screening, onboarding, and compliance for all available vendors.



Vendor Neutrality: The Takeaways

Vendor-neutrality is often preferred for good reason: their competitive, transparent nature fosters innovation, which ultimately leads to getting top talent for low prices. Your organization's staff management practices are only as effective as the MSP itself, so it is imperative to choose one that understands your unique needs.


HWL as Your Vendor-Neutral MSP

HWL's service offerings include MSP, VMS, Locums management, internal agency creation, advisory services, and much more, all built on a foundation of vendor neutrality. We were designed from the ground up to help healthcare organizations contain costs, create long-term sustainability, and provide higher quality of care.

If you have been suffering from excessive staffing costs, as many are in the healthcare space, give us a call to book a demo and find out how our customized solutions can help you attain your goals.

February 21, 2024/By Lauren Cabral
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Author: Lauren Cabral

Lauren N. Cabral joined HWL as the Senior Vice President of Business Development and Consulting Services in 2020. With over a 25-year record of achievement in driving transformational workforce management and talent acquisition optimization strategies to some of the most prestigious integrated delivery networks in the country, Lauren has demonstrated executive leadership in leading teams and large-scale engagements in serving as the Vice President of Advisory Solutions, Business Development and Client Services for some of the most respected healthcare workforce management firms in the nation.
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